EthereumTrading

What you need to know about the Ethereum Merge

Pepperstone
Trading Guides
15 Sept 2022

How does Ethereum work?

Ethereum is used by developers from around the globe for building apps. This is only a part of Ethereum. Other uses include making transactions, holding assets and communication, all without the need to divulge any personal details.

“You keep control of the data that is shared”.   

Ethereum has its own cryptocurrency known as Ether, or eth for short.

Ether can be used to pay for activities that you undertake on the Ethereum network. Being the second largest cryptocurrency by market cap, it is also a very popular asset traded by crypto enthusiasts.

What is the Ethereum Merge and why all the hype?

Some reports are highlighting The Merge as the most important event that has hit the crypto marketplace this year. Others are saying that the event is the largest since the launch of Bitcoin in 2009.

This snippet was taken from Ethereum.org:

Figure 1 ethereum.org

What does all that mean?

In simplistic terms, The Merge is a long awaited and anticipated upgrade to the Ethereum blockchain. A blockchain is a database that stores information in a digital format.  

Data that was stored on Ethereum’s mainnet will be transferred to the Beacon Chain system.

This will have a ‘greener’ effect on Ethereum, with the energy costs reducing by an estimated 99.95%. Computers that were energy heavy will be replaced by computers that are far more energy efficient.

When does The Merge happen?

The first stage, called ‘Bellatrix’, completed at 7.34 EST, on the 6th of September 20022. The second stage, called ‘Paris’, is estimated to be completed around mid-month.

Figure 2 coinmarketcap.com The Merge 07/09/2022 9.00am GMT

Will this be positive for the price of Ethereum?

Let us look at a possible outlook for ETHUSD using technical analysis

ETHUSD weekly chart

ETHUSD broke lower from a pattern known as a flag formation in the week 2nd May 2022. The technical measured move target for the flag is located at 877.16. We saw a low in ETHUSD on the week 13th June of 879.80.

Will we see another drive lower to this area? Could this possibly signal a base for ETHAUD?

Figure 3 Trading View ETHUSD Completed Flag

The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research we will not seek to take any advantage before providing it to our clients.

Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.